The organised retail industry

INTRODUCTION

The Organised Retail industry has been the talk of the business world with some of the big players like Reliance-Fresh & Spencer's, Bharti wall Mart and Birla group 'MORE' entering into this zone (Daftari 2007). These stores are looking to maximise market share by attracting consumers on the basis of price and atmospherics. Presently, corner-shops known as Kiranas account for majority food-sales and dominate the sector with over 5million grocers all-over India followed by independent-vendors. They provide sales in smaller quantities (e.g. 100gm-lentils) along with highly personalised relationship, mainly serving to middle/low-income groups. Whereas organised retailers offer e.g. 1KG packed-lentils serving to middle/upper class. (GMID-Euro-monitor 2006).

Nonetheless, only 3% of Indian market is organised retail (Business Today, 2007) which leaves a gigantic gap for supermarkets to fill. A recent PriceWaterhouseCoopers study suggests that the size of organised retail in India is only $666million which is likely to grow 30% per-annum (Economic-Times 2005, pg16). However, potential of organised-retail soars high as it is a $300billion industry which has set the stage for organised retailers to gain substantial market-share. (http://economictimes.indiatimes.com).

There has been considerable growth amongst middle-class sector in India, increasing the spending power of consumers (Indian-economic-survey 2007).

"With growth in disposable incomes and improving infrastructure, consumers have a wide choice of stores where they can choose to shop. It is therefore, necessary for retailers to understand shoppers' motivations" (Sinha & Bannerjee, 2004).

Moreover, significant changes in lifestyle with new tastes and preferences have developed amongst consumers (Economic-Times, 2007, pg12). As people gain purchasing power the market is shifting from price-linked to value-linked where more value is given to design, atmospherics and differentiation suggests (Chand, 2008-ET-p.12).

Retail Stores are offering a new shopping-experience to all demographics by providing services that offer convenience and comfort along with great-value. In the cultural-context there has been transformation and adaptation towards western ways of life which has specifically influenced young and the middle-age groups. Traditionally, joint-family culture persisted at Indian homes however statistics determine a drastic shift towards nuclear families.

Even looking at the Metros like Delhi, the census states the average size of family in Delhi is 5 (http://delhiplanning.nic.in) which has reduced from 10-15 members in one house-hold. Standard of living is increasing because people aspire to live a better life hence, usually both members of family work for higher earnings. This has increased the pace of life and time is of great value. Transformation to this lifestyle demands services that keep-up with the pace and offer convenience & comfort. As a result, the whole idea of all commodities available under the same roof is likely to fit-in the newly formed culture.

Earlier consumers solely relied on corner-shops/vendors and most international supermarket retailers were turned away in the past to protect the domestic retail industry. Even for local investors it's been difficult to enter this industry due to various political problems. Moreover, most traders' livelihood along with many jobs dependant on them would be lost due to supermarkets. Such factors have added to the delay of organised retail expansion.

Affect on Traders and Small Farmers:

Organised Retail Stores pose great threat to the small farmers as a new supply-demand chain may be formed. Big stores would move towards preferred suppliers, and set private grades and standards which may be very difficult for the local and small farmers to achieve (Humphrey, 2007). He further adds that UK supermarkets selling a lot of fresh-food acquire it in ways that appear to be small-farmer-unfriendly. Similar trend may be followed by the Indian supermarkets, consequently, destroying small traders. Various supermarkets in India like Reliance-Fresh & Spencer's have already had this impact on the livelyhood of traders (The Economic Times, 2007). Moreover, due to mass protest some supermarkets had to pull out of two major states of India (Uttar-Pradesh and West-Bengal) negatively effecting farmers, traders, supermarkets and employees who lost their jobs. (http://economictimes.indiatimes.com).

Socio-Economic Factors:

Social-classes would be another aspect affecting the consumer behaviour. This refers to national status hierarchy by which groups and individuals are distinguished in terms of self-esteem and prestige (Olson & Peter, 2005).

Past purchase experiences can influence the store choice of consumers which are further affected by these Socio-economic factors such as income, geography, personality, age, etc. (Dodge and Summer, 1969). Moreover, Lumpkin et al. (1985) proposes that elderly people are less price conscious in comparison to youngsters. This implies that aspects such-as convenience and familiarity of corner-shops will be of greater importance than savings made at supermarket. (Pettigrew 2005) further adds from reports that supermarkets do not interest seniors. However, the convenience factor is contradicted by Lumpkin et al. (1985) itself, as for seniors' propinquity of store to house is not a concern. Instead, shopping is considered as leisure activity and hence is expected to be high on entertainment value (Tongren, 1988).

Attitudes & Behaviours:

Samovar and Porter (1991) believe that values held in a society, strongly influence an individual's behaviour in cultural groups. Consumer attitudes are a combination of beliefs, feelings and behavioural intentions. If consumers form a belief about a particular trend and feels good about it then their behavioural intentions are very likely to follow those trends frequently (consumer psychologist). Although, de Mooij (2005) feels that in collectivist societies people form attitudes that accomplish their social identity functions forming an inconsistent correlation between attitudes and future behaviour. Hence, their behaviour cannot be predicted by their attitudes towards certain products.

Fishbein's behavioural intentions model measures this relationship between attitudes and behaviour, also known as theory of reasoned action. This assumes that consumers consciously consider consequences of different behaviors and decide on the one that leads to the most desired result (Olson & Peter, 2005). In Delhi this can be used to assess the perception and opinion of others. In sum, behaviors are performed and appraised by people that are popular with other people.

LITERATURE REVIEW

The subject matter of changing attitudes and cross culture influences has had a considerable impact on the consumers of India.

"Cultural meanings include common affective reactions, typical cognitions, and characteristic patterns of behavior" stated in (Olson & Peter, 2005). There have also been common cross cultural changes over the world which can be applied to the Indian market due to considerable cultural transformation. The western market's impact has created similar opportunities for the supermarkets in India. On similar lines (Currah and Wrigley, 2004) suggest that supermarkets are more prevalent across a broad range of developing countries. However, (Sinha & Bannerjee, 2004) argue that high levels of personalised services such as credit and home-delivery offered by 'transformed kirana stores' (corner-shop) are making shoppers reluctant to the supermarket format as a result several successful chains are delaying their expansion.

Reference-Groups:

Store-choice decisions are influenced by different attitudes across the society. India is rated relatively high on Hofstede's uncertainty-avoidance dimension showing increasing use of opinion leaders, group-shopping, and reference-groups (Schutte 1999). This certifies high intolerance of uncertainty and slow adaptation towards change which can further be supported by diffusion of innovation, a framework developed by Everett Rogers (Keegan 2005). In the Asian context the importance of response by referrals along with acceptance of an innovation reduces the perceived risk of product/store choice.

Fresh Food v Packaged Food:

Traditionally, Indian consumers have given priority to fresh food over convenience, however recent researches show, as number of working members increased in a family they prefer more processed food (Bullis, 1997; International-Trade-Administration, 2000). This shows inclination in favor of the supermarkets by generation-Y.

The Economist (1997) contradicts the above by showing more than 40% of the Indian population is vegetarian and consumers dislike frozen products including beef & pork. Hence, a trend that bends away from the supermarket-culture. Reardon et al (2003, 1143) further adds that sales for processed and packaged food at the supermarkets are relatively low as compared to fresh food. This may pose a serious threat to the supermarkets due to the lack of interest in processed food.

However, demand for foreign food products is high and continues to grow. About a decade ago people used to bring foreign goods from trips abroad Bullis (1997). Now these products are available in the supermarkets as major attractions for the ever-changing Indian society.

Atmospherics & Store Entertainment Value:

Kotler (2008) suggests atmospherics as an important aspect for retailers. Most shoppers find multiple motives in a single trip to stores which may include socialising or browsing; not necessarily purchasing (Bloch et al., 1994), according to which atmospherics and entertainment aspects should be focused upon. (Arnold and Reynolds, 2003) suggest that in-spite of this trend less significance has been paid to the utility shopping motivations.

In addition, staff-attitude, queue-lengths, etc influence their store choice pattern (Goodwin and McElwee, 1999). Hence, tangible and intangible factors such as staff-attitude, location and ambiance are vital for consumer appreciation. In comparison of traditional shops to supermarkets, the latter has an advantage in terms of space, ambiance and other physical characteristics, creating a better environment to attract more customers. In addition, services such as coffee-shops and restaurants are also offered at supermarkets (Nguyen and Nguyen, 2003). According to the overall economic condition of India, it may not be possible for many consumers to avail such facilities, as their primary aim would be to fulfill the basic needs. (Boone & Bonno 1971, p. 82) suggest that convenience, friendship and credit are the key basis of choosing a store for low-income consumers. However, supermarkets provide the benefit of hygiene in comparison to corner-shops. Hygiene factors are one of the key considerations, but it is not possible for all retailers (in low-income areas) to maintain them. Supermarkets prevent these climatic and hygiene problems faced by the consumers, as regular shops don't have suitable temperature control equipment nor are backed up by 24 hour electricity.

Trivedi S (2008) has observed that standardization of malls is one of the common phenomenons among malls developers. The look and feel of all malls in general is same and somewhat presents a uniform appearance to the customers. Standardization has its own benefits but uniformity may tend to dull customer's desire. Developers have not thought greatly about the local catchment profile.

Shopping Malls have given birth to a new shopping culture - 'Shoppertainment'. Nowadays, contrary to the real shopping take place, people are opting shopping more for their entertainment purpose.

Author talks about black spots of malls. He says malls attract different level of footfalls and attention from shoppers within its various parts. For example, ground floor attracts more footfalls than any other floor. Shops around the atrium get the maximum number of shoppers. However, there are certain locations in the mall which are overlooked by visitors. They are called black spots of mall. Generally observed black spots are outlets near the entrance, outlets near escalators and elevators and outlets at the end of galleries.

Shinde D (2008) suggests that Customers are willing to travel to a nearby mall for that shopping experience that he doesn't get in the local kirana store. The most common mistake done by national retailers is Standardization. National retailers have to take care about making the brand relevant to the local consumer in the catchment area of the stores. Gopal P (2007) (http://www.livemint.com/2007/05/14003113/Malls-betting-on-entertainment.html)

When people go for shopping, they, especially youth spend their entire day at the mall. They want entertainment also for spending an entire day there at the mall. Strong entertainment needs to be in a mall to encourage loyalty to the mall. Increase in footfalls is not only important but to convert those footfalls into consumption is the key to success.

Need of the hour is to create a mall, where people can spend time with their family.

Most of the malls are providing the same things for entertainment. Like movie theatres, bowling alleys, arcade games, restaurants. No real differentiation could be seen among the malls. Prof. Sundar, (http://www.bim.edu/pdf/Larticle/Building_Successful_Indian_Retail_Brands.pdf)

The research stresses on retail as a brand rather than retailers merely selling brands. The focus of this study was on branding the retail business itself. Store differentiation is missing from Indian organized retail. Leading retail stores like Shoppers stop, Lifestyle, Globus, Pyramid etc. offer common brands, similar ambience and a same commitment to improved service. Real differentiation is lacking among them. National and international retailers are finding difficult to understand the psyche of the local Indian customers, their tastes or preferences etc. Localization with Globalization is necessary for malls.

Situation of lack of professional suppliers in India is also testing the supply-chain of these organized retail stores as the availability of stock is one of the major factors for building loyalty for a particular store.

Recognisability, legitimacy, consistency, proximity, value are the essential characteristics of a brand. Retail branding creates a brand preference, which goes beyond the product or service in itself. Mall developers need to create distinctive brand identities for their specific malls. Everitt L (2008) (http://industry.bnet.com/retail/100044/how-to-build-a-shopping-mall-brand/)

Seven types of shopper profiles have identified in the research. Two types of shoppers are responsible for most of the sales of retail stores. These two types are 'Navigators' and 'Social seekers'. Navigators are independent, creative type and they shop for what they are passionate about. Social seekers also love shopping but they look to others for validation. Navigators need an expert mall, where they find, what they want. Social seekers look into malls which provide a sense of security and consistency.

Different loyalty programs should be introduced for different type of customers to understand and reward them better, in their own desired way.

Sharon R. (2008) (http://query.nytimes.com/gst/fullpage.html?res=9902E4DF103CF930A15751C1A96E958260). Malls are giving rewards for shopping. Rewards range from prepaid calling cards, magazine subscriptions, credit cards to vacation trip etc. creating relationship with customers is the key to success in today's competitive world.

Redeemable points offered by malls through various loyalty cards do not spur sales for the mall from those customers/card holders. But, these efforts help in keeping them coming back to the mall, add some more points and get better reward for some special occasions; like Diwali, Christmas etc.

Gotsis T (http://www.icsc.org/srch/education/newsletter/involveteens.pdf) states that studies have found that teens become more brand loyal when they feel that a company/brand understands them. Malls need to take proactive steps to tap this key customer group. Community outreach programs with the support of marketing team are also organized by the malls to create emotional sentiments in customers mind space.

Pradhan S 2008. In her article associate professor, Swapna Pradhan discusses the dynamic emergence of the mall culture across the country's evolving retail landscape. She talks about Gen X malls, which have been defined by Chesterton Meghraj as greater than 500,000 sq ft and incorporate large entertainment area, with enough spaces for parking and excellent infrastructural benefits that shall be passed on to the retailer. The target audience for the Gen X Malls is the tourist/out of town visitor and the person from the city looking for entertainment options.

Rigby K et al (http://www.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?articleID=R0604E&ml_action=get-article&print=true) Mall developers need to invest some quality effort in understanding the shopping-needs of customers in their targeted "catchment" areas and then build a carefully planned portfolio of retail options that can meet the needs of these targeted customers. Mall developers also have to create distinctive identities for their specific malls, much like the identities that have developed over time for major shopping-high streets in various cities in the country. Their work is not done just when the mall has been commissioned!

Anand K (2008) (http://economictimes.indiatimes.com/News/News_By_Industry/Services/Retailing/Indian_retail_sector_fails_consumer-friendly_test/rssarticleshow/3346373.cms) Article raises concerns about the shopping experience provided by the Indian retail sector. Better shopping experience may lead to more time as well as money spending on the stores. The article also raises worry about issues like jam-packed shopping centres, lack of seating arrangement etc. which ultimately hampers the retailers only. Writer also says with the help of a survey that retail designing is the need for today's retail market. Retail design does not include only interiors but other factors also like determining consumers' attraction etc.

Jain P (2008) Writer is the MD of Parsvanath Developers Ltd. He talks about the anchor stores that they are the champion for any Shopping Mall to attract 'serious' customers again and again. Specialty Mall format is still not considered here but it can give a different position from other Shopping Malls and able to attract genuine customers. Customers want perfect shopping experience and even a minute imperfection can divert them to another substitute Mall. Most of the time, Mall developers lease out the space to retail stores.

NEED AND SCOPE OF STUDY

The Indian retail industry has been fast growing and consumers have started to shift towards retail stores. The retail chain has been fast multiplying with new outlets opening every day. It has a huge impact on the tradition buyers. To get all the things under one roof and get rid of the tradition bargain system. The consumers have started looking towards the retail stores. The change in the retail system and the effect on the consumers need an in depth study to assess the impact of retail stores on the present retail system.

The study will look into the different social and demographic reasons of the consumers for their shifting towards Retail Stores. Also the study will extend it wings towards the factors affecting the consumer buying behaviour. There has been a change in the consumer's attitude towards retail buying after the emergence of Retail Stores. The study will try to assess the Impact made by the Stores on consumers and change in the buying behaviour of the consumers.

RESEARCH OBJECTIVE

  1. To identify the Socio Economic and Demographic characteristics (Income, Economic status, Age and Gender) of the convenience goods buyers who go for the Organised Retail Stores.
  2. To assess the effects of flexibility and convenience factors in Retail Stores on the buying potential of consumer.

FORMULATION OF HYPOTHESIS

  1. H1:- There is a certain section of the society which prefer to buy from Organised Retail Stores.
    • H1.1:- The Income of the consumer affects the preference of consumer to buy from an Organised Retail Store.
    • H1.2:- The Economic status of the consumer affects the preference of consumer to buy from an Organised Retail Store.
    • H1.3:- The Age of the consumer affects the preference of consumer to buy from an Organised Retail Store.
    • H1.4:- The Gender of the consumer affects the preference of consumer to buy from an Organised Retail Store.
  2. H2:- The Flexibility and Convenience have effect on the buying potential of the consumer.

RESEARCH METHOD

The present study is Casual in nature. It adopts survey method for collection of Data. A questionnaire will be used to study the various demographic aspects of the consumers. It will be analysed with the help of the Chi Square and Cluster Analysis and find out the consumers which were influenced by the organised retail stores.

Also a survey will be conducted in the questionnaire with which the various aspects affecting the consumers buying behaviour will be identified. This data will be analysed with the help of Factor Analysis and important factors will be derived.

The study will also assess the impact of Retail Stores on the consumer buying behaviour by assessing the pre Retail store Thinking and Post Retail Store Thinking of the consumer. We will use paired sample test to analyse the impact of the Stores on Consumer. (Malhothra N K 2007)

RESEARCH DESIGN

A research design is a framework or blueprint for conducting the market research project. It specifies the details of the procedures necessary for obtaining the information needed to structure and/or solve the marketing research problems. (Malohtra NK 2007)

The research design is Causal is nature. It will use questionnaire and the study of different literature to collect the relevant information about the socio economic and demographic factors which influence the buying behaviour of consumers. This will also help us to assess the impact of retail stores on the consumer. The important factors governing the consumer buying behaviour will also be identified.

DATA COLLECTION/ SOURCES OF DATA

The data will be collected in two parts:-

  1. Primary Data: - The primary data will be collected through the questionnaire and interviewing the various consumers purchasing through the stores in Jalandhar. The main focus will on Reliance Fresh and Vishal Mega Mart
  2. Secondary Data: - This data will be collected from the official websites, published literatures, and Research Articles.

DATA ANALYSIS

The data collected will be analysed on the basis of the objectives of the study. The analysis techniques will be use such as Cluster analysis, Factor Analysis, paired sample Z test, Chi square. (Nargundkar R 2006) The analysis of the data will be précised to take out the relevant information regarding the impact, buying behaviour and identification of the group of consumers who prefer to buy from the Retail stores.

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IMPACT OF RETAIL STORES ON BUYERS BEHAVIOUR

A STUDY OF CONVENIENCE GOODS BUYERS IN ORGANISED RETAIL SECTOR IN JALANDHAR

RESEARCH OBJECTIVE

  1. To identify the convenience goods buyers influenced by the Organised Retail Stores.
  2. To identify the factors affecting the consumers buying behaviour towards Organised Retail Sector.
  3. To assess the impact of Retail Stores on the buying behaviour of the consumers.
  4. To identify the Socio Economic and Demographic characteristics (Income, Economic status, Age and Gender) of the convenience goods buyers who go for the Organised Retail Stores.
  5. To assess the effects of flexibility and convenience factors in Retail Stores on the buying potential of consumer.

FORMULATION OF HYPOTHESIS

  1. Null Hypothesis Ho: - There is no influence of Organised Retail Stores on Consumers.
  2. Alternative Hypothesis H1:- The consumers get influenced by the Retail Stores

  3. Null Hypothesis Ho:- There are no factors which affect the buying behaviour of consumers towards Organised Retail Stores.
  4. Alternative Hypothesis H1:- There are certain factors affecting the consumers buying behaviour towards Organised Retail Stores.

  5. Null Hypothesis Ho: - Organised Retail stores have no impact on the buying behaviour of Consumers.
  6. Alternative Hypothesis H1:- Organised Retail Stores have a huge impact on the consumers buying behaviour.

  7. H1:- There is a certain section of the society which prefer to buy from Organised Retail Stores.
    • H1.1:- The Income of the consumer affects the preference of consumer to buy from a Organised Retail Store.
    • H1.2:- The Economic status of the consumer affects the preference of consumer to buy from a Organised Retail Store.
    • H1.3:- The Age of the consumer affects the preference of consumer to buy from a Organised Retail Store.
    • H1.4:- The Gender of the consumer affects the preference of consumer to buy from a Organised Retail Store.
  8. H2:- The Flexibility and Convenience have effect on the buying potential of the consumer.

HISTORY

India is a land of retail marketing, hundreds of thousands of weekly haats and bazaars are located across the length and breadth of our country by people's own self-organizational capacities. Our streets are bazaars - lively, vibrant, safe and the source of livelihood for millions. India has the highest shop density in the world, with 11 outlets per 1000 people. This does not include the village haats. Our retail marketing is characterized by:-

  1. High levels of livelihoods in retail with nearly 40 million employed which accounts for 8% of the employment and 4% of the entire population.
  2. High levels of self - organization.
  3. Low capital input
  4. High levels of decentralization

Retail in India has started with the concept of weekly markets, where all the traders gather at one big place to sell their products every week. The people come to these weekly markets to buy the household items for the next one week. Village fairs and melas were also common as it had more of an entertainment value. Once the people started getting busy with their lives and when they turned entrepreneurial, there emerged the mom and pop shops and the kiranas in the neighborhood. After independence, came into existence the system of Public distribution of foods through the ration shops, where food grains, sugar and oil for the daily consumption were distributed at subsidised rates through the government ration shops. The modern corporate retail formats are of the exclusive brand outlets, hypermarkets and supermarkets, departmental stores and shopping malls. But still the Indian consumer depends on the self-organized retail shops for their daily needs.

This is largely due to the excellent food retailing system that was established by the kirana stores that continue meet with all the requirements of retail requirements albeit without the convenience of the shopping as provided by the retail chains. The Hawkers/lari galla vendors and the local kiranas are the two main forms of unorganized retail in the country, which almost account for 97% of the total retail trade.

INDIAN RETAIL SECTOR

The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros and second-rung cities alike introducing the Indian consumer to a shopping experience like never before.

The sector is at an inflexion point where the growth of organised retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. Organised retail is on all time high in India.

The growth is boosted by various factors such as availability of professional practices, media proliferation, various brands which are gaining value thereby enhancing industry growth, availability of various funding options, regulations like VAT implementation to make processes simple, sea change in demographics of country and international exposure.

The Indian retail sector is highly fragmented, consisting predominantly of small, independent, owner-managed shops. The domestic organized retail industry is at a nascent stage. At the macro level factors such as rising disposable income, dominance of the younger population in spending, urbanization, shift of the traditional family structure towards the nuclear family are buttressing the organized retail growth in India. Being considered as a sunrise sector of the economy, several large business houses are entering the retail industry under multiple modern retail formats. On the one hand, the advancement of information technology is improving end-to-end business processing by integrating the entire value chain, backward and forward, for operational efficiencies. On the other hand, rising real estate prices, infrastructure constraints, and expensive technology are making the retail industry capital intensive.

The current regulatory environment is not very conducive to the growth of modern retail in India. The Government of India (GOI) prohibits FDI in retail except for single-brand JVs with up to 51 per cent equity share. The recent growth of the retail industry is already impacting the commercial real estate sector. As a result of shortage of land and rising property prices, finding property in commercial markets is becoming difficult. Further, the land conversion process is complex. The licensing process for organized retail is cumbersome requiring as many as 33 licensing protocols. Taxes differ from state to state on the movement of goods: for instance, some states levy entry tax; a few levy exit taxes; in some states, the local municipal government also levies octroi. Presently, there is the central sales tax (CST) of 3 per cent on inter-state sales and value added tax (VAT) of 4-12.5 per cent on different products. Besides, the lobby against modern retail is mounting in recent months from traditional retailers.

Nevertheless, the macroeconomic landscape indicates that the domestic retail industry has immense scope for the modern as well as traditional retailers to co-exist. Through a balanced regulatory framework and competition policy, both the traditional format and the modern format can continue to grow, eventually closing the gap between the organized and unorganized sectors. Organized retailing will: (i) promote quality employment; (ii) improve business process practices; (iii) spur investments in support industries; and (iv) enable the modernization of the fragmented traditional retail industry.

Modern retail business focuses on maximizing customer footfalls and capturing rising volume and share of the customer wallet. While the competition strategy is largely price focused, the model works by: (i) improving sourcing efficiencies; (ii) expanding product assortment; (iii) differentiating service; and (iv) enhancing the store ambience. Thus, there are four drivers of modern retail's "one-stop shopping model": price, product, service, and ambience.

Organised retailing has definitely made headway in the upper class. However, even in this segment, items such as milk, fruits, vegetables and a significant portion of `through-the-month' purchases seem to be done at traditional outlets. The middle income class prefer shopping for processed food and personal care in supermarkets and fall back on traditional outlets for bulk shopping. Organised retail outlets seem to be associated with branded items/special purchases. Organised retailing does not seem to have made an impact on the lower class, except for `curiosity' shopping. There may be initial hiccups for the large players in getting the sourcing and the supply chain to work smoothly but sooner or later, the economies of an efficient supply system will give the modern retailers a distinct edge over the unorganised, small ones.

Though there are positive outcomes of modern retail, with the most important one being the better price realization potential for the farmer and the price-inflation dampening effect for the hundreds of millions of lower and middle income consumers. But, organized retailing has its own set of challenges:

  1. While land prices have soared, the rentals have become exorbitant.
  2. Poor slotting means having to peddle perfume right next to a smelly pizza hut !
  3. Footfalls do not always mean customers. It's the A/c indoors that they are after.
  4. Local vendor means easy, informal access. Housewife needn't even change or put on footwear or spend Rs.25/- by rickshaw to buy vegetable for Rs.50/-
  5. In our class based society, It doesn't seem that a maid buying her grocery in the same store as her employer.

India is one of the largest emerging markets, with a population of over one billion. Around 70 per cent of the total households in India (188 million) reside in the rural areas, where mostly traditional retail outlets, commonly called kirana stores and small shops exist. These are unorganized, operated by single person and runs on the basis of consumer familiarity with the owner. As organized retail begins to take root in India, the tussle between it and small stores has taken on a new pitch: Companies operating modern retail stores claim they offer wider choice and cheaper prices. This has forced smaller shops to innovate and get competitive with pricing to keep their traditional customers.

The single most important evolution that took place along with the retailing revolution was the rise and fall of the dotcom companies. A sudden concept of `non-store' shopping emerged, which threatened to take away the potential of the store. More importantly, the very nature of the customer segment being addressed was almost the same. The computer-savvy individual was also a sub-segment of the `store' frequenting traffic. Even though the target market for the direct market industry is limited, I do not think it would deter the retailers too much. For all the convenience that it offers, electronic retailing does not suit products where `look and see' attributes are of importance, as in apparel, or where the value is very high, such as jewellery, or where the performance has to be tested, as of consumer durables. The most critical Issue in electronic retailing, especially in a country such as ours, relates to payments and the various security issues involved.

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